2021 Paper Making the Most Significant Contribution to Banking Research Announced

The conference research committee is pleased to announce the selection of “Small Bank Financing and Funding Hesitancy in a Crisis: Evidence from the Paycheck Protection Program” as the paper that made the “most significant contribution to banking research” as part of the 2021 Community Banking in the 21st Century research and policy conference. The authors of the winning paper are Tetyana Balyuk, Emory University; Nagpurnanand Prabhala, Johns Hopkins University; and Manju Puri, Duke University.

The conference, sponsored by the Federal Reserve, the Conference of State Bank Supervisors (CSBS) and the FDIC, was held virtually Sept. 29-Sept. 30, 2021.

Here is a summary of their paper from the 2021 Conference Volume:

The authors studied the delivery of subsidized financing to small businesses in the Paycheck Protection Program (PPP). Empirical findings revealed larger firms gained earlier PPP access, which reduced PPP loans made by small banks to small business customers. However, the authors found this was not always the case, particularly for small banks that had established prior relationships with their respective small business customers. The findings reinforce the existing banking literature in suggesting small businesses benefit from pairing up with small banks. In addition, the authors found hesitancy in PPP participation reflected recipients’ wariness of government investigative power over recipients.” 

The full paper can be read here.

Watch Balyuk’s presentation of the team’s paper during this year’s virtual conference. You can also view the academic moderator response to the paper from Christa Bouwman, the interim head of the Department of Finance at Texas A&M University, as well as the response from the paper’s community banker discussant, James Nicholson, president and CEO of North Valley Bank, Zanesville, Ohio.